How would you react if a financial advisor told you that your investment could appreciate by 14,555% in just seven months? It sounds unbelievable and most people would laugh it off.
But that’s just what happened in the case of Temptation Foods, a stock listed on the BSE. The stock zoomed from Rs 1.52 on March 1 to Rs 222.75 on Thursday, up precisely 14,555%. And it isn’t an isolated case. At least 16 BSE scrips have given returns of over 1,000% in just under one year.
Solix Technologies raced ahead 8,900% from Rs 1.8 on February 27 to Rs 160.35. And Innovative Foods, a scrip trading at Rs 1.8 on September 15 last year, rose to Rs 160.35—up a whopping 808%. The stock had stopped trading for over five months, but was re-listed on the BSE after its equity capital was reduced and another company was merged with Innovative Foods.
Among the 16 stocks, Solix Technologies, Indiaco Ventures and Biogreen Industries have spurted without substantial volume to justify widespread investor interest.
In this group, one stock needs a special mention: Jai Corp, a stock that gained over 2,400% to Rs 7,701 now from Rs 307 on October 5. The company is run by Anand Jain, the right-hand man of Mukesh Ambani. And market players feel that with the senior Ambani’s businesses going from strength to strength, there could be more money to be made in Jai Corp. The rise in the stock price was accompanied by good volumes.
But before you rush to your investment advisor to reshuffle your portfolio, take a closer look at the rise in share price of these stocks. When scrips like these start to rally, the volumes are typically low, pointing out that just a few people are trading in the counter. It is these few initial players who have a personal interest in the stock that drive most of these meteoric gains by floating stories about the company in question.
These stories about future growth of the firm, whether it’s a merger or a takeover rumour, almost never take place. As the stock gains momentum on the back of these stories, more investors jump on the bandwagon to get a piece of the action. And once it climbs to a certain level these early players or operators exit the counter, leaving a lot of investors stuck.
‘‘None of these stocks would be in any decent fund manager’s portfolio. They generally have poor fundamentals, poor following and low liquidity. They are usually small- to mid-caps, and their sudden rise would be driven mainly by rumours,’’ said Arun Kejriwal, KRIS, an investment advisory firm. For all practical purposes picking up these stocks is more of a gamble and definitely not a smart investment idea. If one buys into a stock that’s quickly rising, one might make some gains but should be equally prepared to lose it all.
On its part, market regulator Sebi keeps a constant watch on any unusual rise in stock price.
But that’s just what happened in the case of Temptation Foods, a stock listed on the BSE. The stock zoomed from Rs 1.52 on March 1 to Rs 222.75 on Thursday, up precisely 14,555%. And it isn’t an isolated case. At least 16 BSE scrips have given returns of over 1,000% in just under one year.
Solix Technologies raced ahead 8,900% from Rs 1.8 on February 27 to Rs 160.35. And Innovative Foods, a scrip trading at Rs 1.8 on September 15 last year, rose to Rs 160.35—up a whopping 808%. The stock had stopped trading for over five months, but was re-listed on the BSE after its equity capital was reduced and another company was merged with Innovative Foods.
Among the 16 stocks, Solix Technologies, Indiaco Ventures and Biogreen Industries have spurted without substantial volume to justify widespread investor interest.
In this group, one stock needs a special mention: Jai Corp, a stock that gained over 2,400% to Rs 7,701 now from Rs 307 on October 5. The company is run by Anand Jain, the right-hand man of Mukesh Ambani. And market players feel that with the senior Ambani’s businesses going from strength to strength, there could be more money to be made in Jai Corp. The rise in the stock price was accompanied by good volumes.
But before you rush to your investment advisor to reshuffle your portfolio, take a closer look at the rise in share price of these stocks. When scrips like these start to rally, the volumes are typically low, pointing out that just a few people are trading in the counter. It is these few initial players who have a personal interest in the stock that drive most of these meteoric gains by floating stories about the company in question.
These stories about future growth of the firm, whether it’s a merger or a takeover rumour, almost never take place. As the stock gains momentum on the back of these stories, more investors jump on the bandwagon to get a piece of the action. And once it climbs to a certain level these early players or operators exit the counter, leaving a lot of investors stuck.
‘‘None of these stocks would be in any decent fund manager’s portfolio. They generally have poor fundamentals, poor following and low liquidity. They are usually small- to mid-caps, and their sudden rise would be driven mainly by rumours,’’ said Arun Kejriwal, KRIS, an investment advisory firm. For all practical purposes picking up these stocks is more of a gamble and definitely not a smart investment idea. If one buys into a stock that’s quickly rising, one might make some gains but should be equally prepared to lose it all.
On its part, market regulator Sebi keeps a constant watch on any unusual rise in stock price.
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